ABSTRACT
Malaysia’s success today is in large partly due to the priority we have given to the development of human capital in the national strategic planning since the early 1990s. Through Vision 2020, Malaysia has declared that, “Our People are Our Ultimate Resource”. Since then, the country has given top priority in developing this ultimate resource. Basically, physical development is very important for a developed nation. However, we cannot forget the importance of developing our human resources.The purpose of this study is to investigate the long run and short run relationships between Human Capital and Growth in Malaysia by using time series econometric techniques i.e. the unit root test, cointegration test, error correction model (ECM), short-run granger causality, variance decomposition and impulse response function. The cointegration analysis is becoming more important in time series analysis, since it indicates the possibility of integration and cointegration among the variables in the long run relationship.
